NU Online News Service, May 11, 2:14 p.m. EDT
Insurers are less inclined to use prior-year reserves to mask losses, according to a financial analyst's latest report.
Stifel Nicolaus' Meyer Shields says in a review of 52 publicly held insurance companies that aggregate quarterly loss reserve releases declined 17 percent from the same period last year. The report follows the analyst's fourth quarter observation that 2011 fourth-quarter loss-reserve development declined by 12 percent in 2011 over 2010.
For 2012's first quarter, net releases fell to $1.5 billion compared to $1.8 billion in 2011, Shields says.
While the number may not be significant, Shields says seven insurers accounted for 60 percent of the total reserve releases while only contributing 34 percent to the group's net earned premium.
The insurers are:
- ACE
- Allstate
- Chubb
- Cincinnati Financial Corp.
- Markel
- ProAssurance
- Travelers
Close to 63 percent of the companies in the survey reported lower year-over-year reserve releases and 19 percent reported net unfavorable loss development.
Additionally, most insurers indicated they had implemented rate increases, but Shields says the reported hikes are not enough to match or exceed current claim-cost inflation.
He adds that with a remote chance of interest-rate increases to help insurers' investment portfolios, more rate increases are expected, and insurers will likely walk away from business deemed unprofitable.
Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader
Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
